Why Health Net Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of commercial managed health-care services company Health Net (NYSE: HNT  ) vaulted higher by as much as 15% after announcing its third-quarter earnings results and resolving a dispute with the state of California.

So what: For the quarter, Health Net reported a 3% rise in revenue to $2.78 billion as its net income fell to just $0.22. Wall Street had been looking for the health-care solutions provider to report $0.36 in profit on revenue of $2.8 billion. Luckily, shareholders were willing to overlook the earnings miss because Health Net resolved its long-standing dispute with the state of California's Health Care Services department regarding cuts to Medicare and Medicaid reimbursement rates. The company pledged to find new ways to work around the cuts and received contract extensions that extend through 2018 to 2022.

Now what: It's great news that Health Net isn't locking horns with the state of California anymore, but that doesn't exactly give it a clean bill of health. Plenty of challenges still remain, given reduced reimbursement rates and higher medical costs within the state. I'd give Health Net a few quarters to prove its own health to investors before you even remotely consider buying into this company.

Craving more input? Start by adding Health Net to your free and personalized Watchlist so you can keep up on the latest news with the company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2096391, ~/Articles/ArticleHandler.aspx, 4/21/2014 6:37:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement